FORBES — Inflation may have slowed slightly since last summer, but Americans are still feeling the financial crunch.
In fact, more than 1 in 3 adults says the national economy is a major source of anxiety, according to an AP-NORC poll. For those with household incomes below $50,000, the situation is even more acute; 63% lack confidence in their ability to pay an unexpected medical expense.
As we navigate these tumultuous times, we do not yet know whether we will end up in a recession, or if we’ll achieve a “soft landing.” Conflicting data tied to monthly jobs reports and the elevated inflation rate are stoking fears among Americans. The reality is that in today’s economic climate, one additional Fed rate hike, a lost job or unexpected expense could push too many Americans to slip from scraping by to a precarious financial position.
At the same time, the banking industry is at a critical inflection point. Given recent high-profile bank failures, the industry needs to shore up customer trust. At its best, the banking sector has the potential to not only protect consumer assets, but also design products and services that bolster customers’ financial stability—giving them the tools to address liabilities responsibly and create wealth.
So, it is time for the banking industry to act. We need to deliberately build solutions for our customers that make them feel in control during times of financial stress and confident during times of financial gain. Here’s how banks can show up for their customers at this critical moment:
Share the wealth, not the burden.
As the Federal Reserve raises interest rates, raise the APY on savings; don’t just pass along higher lending rates.
Instead of passing along interest expense burdens to end consumers, banks should increase interest rates on savings. Offering high-yield savings accounts, which pay a great deal more than the national average, which as of this writing is 0.42%, can help customers ensure their hard-earned savings grow in an inflationary environment.
Prioritize customers’ mental and financial health.
A recent CNBC survey found that 70% of Americans are feeling the weight of financial stress. With access to customer data, a plethora of tools and embedded financial expertise, banks are well positioned to share resources that alleviate stress by building strong financial management skills. Banks can provide free financial education programs that explain financial concepts to customers in plain terms and use evidence-based strategies to give customers the tools they need to build their wealth.
Further, banks should incorporate behavioral economic nudges into mobile and online banking user experience that encourage positive financial habits and put the customer in control. These nudges, such as an automated reminder to check your free credit report or when your loan is due, help people overcome decision paralysis by making it easier to adopt smart financial behaviors.
Moreover, banks should adopt a “no surprises policy,” with a commitment to disclosing fees with customers transparently both at the start of and throughout the course of customer relationships.
Offer customers grace and forgiveness.
Many American workers participate in the gig economy at some capacity, making uncertain cash flows common, and flexibility and leniency from their bank, critical. With unpredictable earnings and expenses, even if a customer struggles one month, there is a good chance they can get back on track if given the opportunity.
Wherever and whenever possible, banks should look to give grace to their customers. Banks can do this by instilling a no overdraft fee policy and committing to building solutions that are fair and consistent, so customers know what to expect and when to expect it.
Leniency is also critical during times of need. For example, as more regions experience extreme weather events, banks should appropriately and proactively waive late fees and offer accommodations to customers in impacted areas.
Design credit-building products that promote economic mobility.
When done right, credit-building product design can be transformative for hardworking Americans. With innovative technology and product teams, banks can create solutions that propel customers’ financial health forward. Solutions that are geared toward customer success—such as secured credit cards with no minimum security deposits, no annual fees and fail safes to avoid runaway debt—can help someone with no or poor credit dramatically improve their credit score and achieve economic mobility.
Embody your customers’ values.
Exploiting and profiteering from those who need financial help most should no longer have a place in our industry. Ultimately, banks and non-bank fintechs need to actively build solutions for all, not just the lucky few. By championing financial inclusion and authentically aligning to customers’ belief in opportunity for all, banks can win consumers’ trust and fortify their relationships while having a positive societal impact.
Amid the financial tumult, uncertainty and anxiety, we need to ensure that our nation’s banks foster economic stability and mobility for consumers. At this critical inflection point for the industry, we must build better, fairer banks for Americans, pledge to always listen to customers and most importantly make banking easy, intuitive and universally accessible.
